Sources: ESPN Laying Off Hundreds [UPDATE]

ESPN is laying off a portion of its staff today, a network spokesman confirms to us. How many? ESPN won't say. A tipster told us earlier today that it would be more than 400 staffers. A source at ESPN said that number is a little high, but it appears to be in the hundreds.

Here's the statement from ESPN:

We are implementing changes across the company to enhance our continued growth while smartly managing costs. While difficult, we are confident that it will make us more competitive, innovative and productive.

So where in the world did this come from? ESPN is monstrously profitable and we hadn't heard a word about this until this morning. Well, ESPN has been gobbling up live rights to events left and right, and those rights are really expensive. We've heard they needed to reduce costs as a result. Also: ESPN's parent company Disney is apparently asking all divisions to cut costs.

This is ESPN's first major staff reduction since 2009.

We heard the technology group is getting hit pretty hard: at least 40 layoffs are coming there. A source told us that some employees who get a pink slip today can continue working through the end of the week if they'd like. ESPN has 7,000 employees.

UPDATE, 11:54 a.m.: A laid-off ESPN employee writes us:

I was laid off from ESPN today after 9 and a half years. Completely out of the blue, no warning at all. I was told it was 10% across the board, which would be roughly 400. I was told the reason was they needed to make their profit margin and they chose to do that via layoff of staff.

UPDATE, 12:10 p.m.: More from the laid-off staffer:

btw.....we were told that the layoffs ARE tied to the profit margin that ESPN needs to meet and the fact they haven't met that number. Your comments about them buying all of these live rights and now needed to reduce overhead costs is dead on.

Additionally, this staffer got the following:

  • gets to keep key cards and access until Friday
  • will continue to get paid through the end of July
  • a severance package, which appears to be 2 weeks for every year worked

UPDATE, 12:20 p.m.: A reader writes that ESPN's "Denver Office in the Denver Tech Center was shut down yesterday. All 20 staff members were let go." A second source told us the same thing about the Denver office.

UPDATE, 12:25 p.m.: Those Guys Have All The Fun co-author Jim Miller hears that the number of layoffs is between 300 and 400.

UPDATE, 12:39 p.m.: By the way, Disney's stock hit an all-time high two weeks ago. God.

UPDATE, 12:48 p.m.: More from our source who was just laid off by ESPN:

The majority of the layoffs today and tomorrow are in Technology...something like 40 people, at least that's what I've heard. All three HR people assigned to Technology are handling layoffs today and tomorrow. No idea what is going on in the other departments. I was told ESPN was forced, by Disney, to do the layoffs due to profit margins. The end numbers / percentages, may not be exactly what they're telling us as we're being laid off. The last time there were layoffs, ESPN used it as an opportunity to get rid of older, higher paid workers, while continuing to fill jobs, including the same jobs of people who were laid off (Supervisors in Operations, for instance). I haven't quite figured out why they didn't try salary reductions, or at least offer salary reductions as an option / alternative to being laid off. It doesn't seem like they're quite the people caring company they'd have people believe they are.

UPDATE, 1:05 p.m.: Reminder: Last week, ESPN released a video of its huge new SportsCenter set. The building that's going to house that set is going to cost ESPN $125 million.

UPDATE, 1:24 p.m.: A still-employed ESPN source tells me that ESPNU's new late-night show UNITE will be canceled in July. The staff of the show found out today. The source tells me "that people on the show who have not been with ESPN for more than 10 months are being let go. 65% of the staff was hired nine months ago." We're not sure how many people this will impact but my source says more than a dozen will lose their jobs from this.

UPDATE, 2:01 p.m.: We heard from a UNITE staffer who said that the staff hasn't been told that the show is canceled, but they're expecting that.

UPDATE, 2:53 p.m.: More mail from the laid-off ESPN staffer. The soon-to-be ex-employee emphasizes what a shock this was:

This was just such a surprise. When they did the layoffs in 2009, there were rumors and rumblings, and people sort of prepared themselves and hoped for the best. With the build of DC2, and all the rest of the work going on, and the record profits. There was just absolutely no hint of potential layoffs. No one expects an employer to say, "hey, layoffs are imminent," but generally employees do get a feel for when a company is going to be in layoff mode, due to earnings, or watching business decisions which are made. Every indication at ESPN has been of a profitable company continuing to expand. The people who've been laid off are not the deadweight 10%, a lot of them are the older, higher paid people who are undoubtedly going to be replaced with lower wage, young, new hires. This was purely about a company making a LOT of money (rumored internally to be $500 million ever other month) wanting even more and getting it at the expense of a lot of people and their lives. If they truly cared about their employees, they could have gotten creative with options for wage reductions or early retirement options. They hacked 400+ people and will no doubt replace those 400+ people with younger, cheaper, less experienced people. Ultimately, it's up to the viewers to determine if it makes any difference to THEM how a company behaves towards its employees in real life, and not just the illusion that company presents to the outside world. It seemed a great place to work, but a truly great company wouldn't have done this today, in the way it was done.

UPDATE, 4:59 p.m.: An ESPN source tells us that all departments "are under review." As The Big Lead is reporting, layoffs today (and more tomorrow) are concentrated in sales and technology. Production layoffs "will occur once the review is done," says our source. "Some departments started their review before others so that all the layoffs didn't occur at the same time." So, the bad news is going to continue for at least another week.

UPDATE, 5:26 p.m.: ESPN has found a way to articulate to employees about why these layoffs are happening—and apparently will continue in the coming weeks:

They said choosing who gets laid off will partly have to do with performance but mostly based on what positions they can do without. They said this is all cause of the money ESPN invested in its future—SEC Network, new digital center, NFL rights, etc. They expect ESPN to be extremely profitable in the future but they have to cut costs now to make sure they have enough money over the next few years while so much money is tied up in investing in the future.

UPDATE, May 22 6:58 p.m.: Did these layoffs have anything to do with that new $125 million building? A recently laid-off ESPN employee offers up some intriguing speculation.

Know more? Let me know: koblin@deadspin.com.